Disappearing act: advanced technology cuts back on paper use.

Michael A. McCreary, CPM, was drowning--drowning in a sea of paperwork and file cabinets that had overtaken his office space as his business had expanded. He knew he needed to do something before his "paper problem" got further out of control.

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"It was overwhelming,"

The solution for McCreary, president of McCreary Realty Management Inc., in Marietta, Ga., was to create a paperless office by implementing technology that would drastically reduce reliance on paper files and documents--a solution he said has allowed him to save space, money and time, and make his office more efficient.

"Now, we're much more integrated," McCreary said. "We're much more collaborative. It has allowed us to manage more communities with fewer people [on staff]. It improves the bottom line, and it improves the quality of life in the office."

Companies with paperless offices are entirely or mostly automated: All their information--including communications, records, documentation and financials--is stored and transferred electronically, eliminating the need for paper, or at least reducing the flow of paper from desk, to copier, to file cabinet and beyond.

Professional industries, like banking, have adopted the automated document approach in recent years in order to cut back on the overwhelming amount of paper used to operate their businesses. Real estate companies are following suit, investing in intricate software in some cases and simple hardware in other cases to reduce paper use and streamline their workflow.

"We're getting to the culture where people don't feel the need to do everything with paper," said Jay Irwin, an industry principal for real estate, construction and home building for SAP, which provides collaborative business solutions. "More and more we're going to see people adopt [paperless initiatives], just as they adopted online banking in the last five years."

DROWNING IN PAPER

Defining a paperless office and determining whether businesses can ever truly operate without paper are hot topics for debate in the business world today. Larry Newcomer, director of marketing for Domin-8 Enterprise Solutions, an advanced property management software company, distinguished paperless offices from what he called "paper flowless" offices.

He said in "paper flowless" offices, a lot of paper is still produced, but it doesn't necessarily get moved around as much and doesn't have to touch as many people's hands. In paperless offices the amount of documents printed on paper is either dramatically reduced or eliminated.

Paperless offices gained attention in the 1990s with the growth of personal computers, but the dot-com bust in the early 2000s quashed the buzz substantially. Additionally, technology like the photo copier and fax machine continues to enable the mass production and use of paper documents.

Today, offices absent of paper or using minimum amounts of paper are gaining ground again. More businesses are taming their paper use, thanks in part to advanced technology allowing multiple parties to manage, revise, share and execute documents electronically.

Driving the trend toward automation in the real estate management industry is the desire among managers and management firms to save time, money and paper. Technology is allowing them to do just that as it simplifies workflow in such a way managers can spend less time shuffling papers, hire less staff and simply have less paper in general.

McCreary's office went paperless in 2004. He first noticed a surge in paper and file cabinet usage after adding homeowners associations to his company's portfolio in 1997. The company kept paper files for each property and unit it managed--nearly 3,000 units. McCreary determined each community took up from one to eight feet of drawer space.

Since launching his paperless initiative, McCreary said he's saved about 200 square feet of space, or $3,000 worth of file cabinets. And while his business has more than doubled in recent years, his company's paper usage has not. It has stayed comparable, he said. Additionally, he didn't have to hire more people to manage the increase in paperwork because the technology he invested in was alleviating the crunch.

Kim Carlson, CPM, and founder and chair of the board for Cities Management Inc.--a Minnesota-based property management firm--also took her office paperless about five years ago. She, too, said her company was able to save a tremendous amount of money in storage space and human capital by investing in technology to streamline workflow. She said plenty of technology options are out there to meet the needs of any size real estate manager.

"Find a system out there that will meet your needs," Carlson said.

SCANNING FOR SOLUTIONS

For Carlson, finding a system that met Cities Management's needs meant she and her management team had to develop the company's own software application. It took many years and several million dollars, but the final product--which focuses on electronic communications, virtual content management and automated document processing--was exactly what the company needed.

Software is often the solution to taking an office paperless because it can integrate so many of the functions necessary for running a management company--on both the tenant and resident relations side of the business as well as the operational side of the business. Carlson said companies should select a software system that works well with their accounting system, is Web-based, has good security and fits with the type of properties they manage.

Advanced accounting software is a solution for some because it streamlines accounting functions, reduces reliance on paper invoices and can integrate other management components as well, said Michael Egelston, CEO of Cities Management and the related SenEarthCo., a provider of online management tools. Such systems can run between $40,000 and $50,000, Egelston said.

Document management systems and Web content management systems focused on storage, versioning, security, indexing and retrieval are also waging the war against paper as they restructure and simplify workflow, said Newcomer of Domin-8. He said these systems create a one-stop shop for retaining, retrieving and revising documents and passing documents along to others.

If advanced software systems seem out of reach, other affordable options are out there. With eight employees, McCreary wanted to reduce paper without blowing the budget. He spent between $2,500 and $3,000 during a two-year period in actual technology costs.

He bought a multi-function scanner, which also acts as a fax machine, printer and copier. The scanner automatically converts paper documents into PDFs and files them electronically. He also purchased two network-attached storage devices--data storage technology accessed over a computer network or local area network, rather than directly through a local computer.

Such devices are redundant: Two servers provide the same function. Should one of the servers become overloaded or fail, the other server automatically takes over without an interruption in service. The devices also back up information on a timely basis. McCreary invested in Buffalo TeraStations, but other network-attached storage devices are out there.

Egelston said any step toward paperless offices is a step forward because of the positive impact they have on businesses. He said business owners should be careful with piecemeal solutions, though, because they can end up spending more money than if they invested in one integrated solution. He also said piecemeal solutions sometimes work against integration, which is the point of these systems in the first place.

"The advantage of our technology-driven world is you can integrate your business so you have it in a single repository accessible through a single system," Egelson said. "You have to do a really good job of evaluating--of narrowing your options. Realize software is software. Customizations can be made ... but you can't find software that will be completely malleable to your distinct way of doing business."

PAPERLESS IS MORE

Cities Management's integrated software solution making the office paperless has changed the way the company does business. Processing the documents when a unit was resold in the past required a Cities Management employee to spend 45 minutes gathering information, preparing a document, making copies and sending out the documents. Now, however, the system automatically produces the documents within seconds of the request.

Additionally, the company has been able to reduce its reliance on human capital--its biggest expense, Carlson said. Before implementation, the company was at about 5 percent or 7 percent profitability, she said. Now profitability is over 25 percent.

Paperless solutions have also helped McCreary establish a more efficient workflow process, which in turn, affects his company's bottom line. He said he too is better able to manage the workload, while keeping personnel costs down and prices competitive.

"It makes a difference in pricing our business because I don't have to pay five or six more people to manage all this paperwork," he said. "I can do it with the people we have and still keep up a high level of service. People interested in our services are pleased our fee structure is not personnel heavy, but technology heavy."

Having information available at anytime, from anywhere is another advantage of going paperless. McCreary said having access to important information while being mobile, instead of tied down to file cabinets, helps him do his job more efficiently.

From a customer service standpoint, real estate managers can respond to tenant and resident requests more quickly. Rather than searching through the file room, managers can find answers with a few clicks of a mouse.

"The industry is competitive," Newcomer of Domin-8 Enterprise Solutions, said. "Getting your hands on information to make decisions quickly is becoming more critical; you can't do that when you have paper stored in files."

Many real estate management firms have also reduced lease-cycle times as a result of using technology: Some software will allow leasing agents or property managers to input a potential resident's or tenant's information only once, and then run a credit report and background check simultaneously. The input information integrates with the screening information on the Web, and almost instantly, a manager will know if the resident or tenant is an approved lessee.

"The less time it takes to get someone into the office, retail or residential space, the quicker managers are collecting rents and reducing vacancies," Irwin of SAP said.

PSYCH 101

While paperless offices might indirectly lead to quicker lease-cycle periods, transitioning to such an office--or convincing other staff to transition--often takes time. Printing e-mails, revising documents on paper and making hard copies can be tough habits to break. Success within a paperless office is rooted in facing the psychology of paper.

"It becomes a willingness to change the way you work," Egelston said. "Too many people have a tremendous desire to have a piece of paper in their hand. In truth, electronic data storage is much safer and easier to find."

Gaining acceptance of paperless processes from employees and tenants starts at the top.

"We make sure everyone in leadership positions is on board with the technology so you don't have anyone sabotaging the efforts," said Carlson of Cities Management.

At the personnel level, a company may face turnovers from reluctant employees.

"There are employees that are old-school that you might lose if you make this move," McCreary said. "There are people who refuse to own and work with computers."

Because so many other companies like banks and credit card companies have converted to paperless technology solutions, Carlson said she faces little resistance from tenants and residents anymore.

Still, she said they must be educated on the systems constantly. Cities Management sends out newsletters reminding residents of the system, how to access it and what kind of information can be found online.

While paperless offices are gaining ground, a 100-percent paper-free office may still be a pipe dream.

"I don't think we'll ever really get rid of all the paper," said Carlson. "But if you think of using only paper on one end of the spectrum and being totally paperless on the other, firms can easily be somewhere in between."

Diana Mirel is a contributing writer for JPM. Questions regarding this article can be sent to kgunderson@irem.org.

Every one gigabyte on a computer can store between 50,000 and 70,000
pieces of paper; one gigabyte equates to four, four-drawer file
cabinets.
--American Document Management

U.S. offices create 12.1 trillion sheets of paper each year.
--Hewitt Packard

Every day, U.S. papermakers recycle enough paper to fill a 15 mile long
train of boxcars.
--American Forest and Paper Association

In 2005, the amount of paper recovered for recycling averaged 346 pounds
for each man, woman and child in the United States.
--American Forest and Paper Association

Recycling one ton of paper saves about 17 trees.
--American Forest and Paper Association

RELATED ARTICLE: ELECTRONIC SIGNATURES

Electronic signatures are helping property managers manage contracts, leases and other sensitive documents electronically.

Years ago, an ink signature was required for many documents. Now, many states are passing laws making electronic signatures legally binding. To find out your own state's laws, seek legal counsel.

  Here are the latest happenings in electronic solutions: While standard
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Domin-8 Enterprise Solutions offers clients digital signature capabilities for lease documents by utilizing an electronic pad, similar to those in grocery stores. The signature is then digitized, encrypted and placed in the document, making it a legal document.

Many new laws and cases have addressed how long electronic records must be kept. Again, it is best to seek legal counsel about the management and storage of electronic records. In the meantime, make sure all appropriate documents are in an easy-to-find, accessible virtual location.